MRO Today - Manufacturing Industry News

Manufacturing Industry News Archives:
News from the week of Sept. 20, 2004

Air pollution declines in 2003
Jobless claims on the rise in recent week
Short on dough: Interstate Bakeries files for bankruptcy
Plexus to cut 160 jobs in Washington, move work
Natural gas costs take toll on small manufacturers
Business community supports greenhouse gas reductions
Natural gas could support manufacturing sector expansion
Confidence among job seekers increases
OSHA cites envelope manufacturer for safety violations
Ohio manufacturer to to shut down
MAPI: Manufacturing recession, recovery ends
OSHA fines auto parts maker following amputation
SME offers certificate program on metal fluid management

Air pollution declines in 2003
Total emissions of the six principal pollutants identified in the Clean Air Act dropped again in 2003, signaling that America's air is the cleanest ever in three decades, the U.S. Environmental Protection Agency (EPA) reported today.

Annual emissions statistics for the six pollutants are considered major indicators of the quality of the nation's air because of their importance for human health and the existence of their long-standing national standards.

Emissions have continued to decrease even as our economy increased more than 150 percent. Since 1970, the aggregate total emissions for the six pollutants -- Carbon Monoxide (CO), Nitrogen Oxides (NOx), Sulfur Dioxide (SO2), Particulate Matter (PM), Volatile Organic Compounds (VOCs) and Lead (Pb) -- were cut from 301.5 million tons per year to 147.8 million tons per year, a decrease of 51 percent.

Total 2003 emissions were down 12 million tons since 2000, a 7.8 percent reduction. See summary table.

"Thanks to this progress, today's air is the cleanest most Americans have ever breathed," said EPA administrator Mike Leavitt. "Now, EPA is taking up the challenge to accelerate the pace of that progress into the future."

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Jobless claims on the rise in recent week
New claims for unemployment insurance increased 14,000 to 350,000 for the week ended Sept. 18, according to the Labor Department. The four-week moving average was 341,000, an increase of 2,000 from the previous week.

The four-week moving average is generally considered by economists to be the more reliable of the two because it smoothes out week-to-week volatility. Both rates remained below 400,000, which is the level economists use to define a weak labor market and a stable one.

Continuing claims for unemployment insurance increased 5,000 to 2.9 million for the week ended Sept. 11. Continuing claims are those older than two weeks.

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Short on dough: Interstate Bakeries files for bankruptcy
Interstate Bakery Corp. filed for Chapter 11protection in U.S. Bankruptcy Court for the Western District of Missouri in Kansas City on Sept. 22. The world-famous bakery is known for producing Twinkies and Wonder Bread.

Over the last several years, the company fought a losing battle against low-carbohydrate diets, the popularity of which forced many consumers to quit eating breads and other high-carbohydrate foods.

Interstate Bakeries cited liquidity issues, resulting from declining sales, a high fixed-cost structure, excess industry capacity, rising employee healthcare and pension costs and higher costs for ingredients and energy, as major factors in its decision to file. Now, Interstate is faced with debt of $1.3 billion and continued weak demand.

Concurrent with the filing, the company received a commitment for $200 million in financing from JPMorgan Chase Bank to fund operating expenses, supplier and employee obligations. The company said that it would continue to operate its bakeries.

Separately, the company's board of directors named turnaround experts Tony Alvarez to the position of CEO and John Suckow to the position of chief restructuring officer. Both are executives for turnaround management services firm Alvarez & Marsal Inc.

Director Leo Benatar was elected non-executive chairman of the company's board of directors and James R. Elsesser, the company's former chairman and CEO, resigned.

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Plexus to cut 160 jobs in Washington, move work
Contract manufacturer Plexus Corp. announced a $10 million to $13 million restructuring program, which includes the closure of its facility in Bothell, Wash., outside of Seattle. The plant closure will result in 160 job cuts.

Plexus replicated the focused capabilities of its Bothell facility at other Plexus design and manufacturing locations that have higher productivity, according to Dean Foate, Plexus CEO. He said the company plans to transfer customer programs to other locations, primarily in the U.S.

“This restructuring will reduce our capacity by 100,000 square feet and affect approximately 160 employees,” said Foate. “We currently expect the consolidation efforts will be completed by the end of our fiscal 2005 second quarter, subject to customer timelines.”

Gordon Bitter, Plexus chief financial officer, said the company expects the restructuring to improve capacity utilization and provide pre-tax savings of approximately $2 million per year. Bitter also said the company expects to incur start-up costs related to its new Penang, Malaysia, facility during the first two quarters of 2005.

Plexus is currently headquartered in Neenah, Wis.

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Natural gas costs take toll on small manufacturers
Small manufacturers are getting hit hard by the high cost of natural gas, according to testimony presented Sept. 22 at a hearing of the House Small Business Committee Subcommittee on Rural Enterprise, Agriculture and Technology.

Even businesses in healthy industries like construction are getting pounded.

“It’s just obscene,” said J. Fletcher Smoak, chairman and CEO of Old Virginia Brick in Salem, Va., a 125-year-old brick manufacturer. “Production is at record levels but we’re barely skimming by. We feel like were working for the bank and the energy companies.”

Smoak said his natural gas bills doubled this summer alone.

Old Virginia Brick and other small-to-midsize manufacturers are especially hard hit by energy prices because production levels are variable and small firms may not have the resources to weather price spikes.

“The cost of doing business in America is already 22 percent higher than in other countries, due to excessive litigation, onerous regulations, and high health care costs,” said Smoak, a member of the National Association of Manufacturers. “We need to bring these costs down to stay competitive in the global economy.”

Smoak called for increasing energy sources, investigating the causes of the latest price spikes, and increasing energy alternatives like landfill natural gas, which converts gas produced in landfills to a usable energy source.

“Funding to help develop this type of resource could greatly reduce the natural gas demand by allowing brick companies in many locations to convert to using it,” said Smoak. “We would also reduce pollution, since the landfills would no longer need to flare the gas that is being generated.”

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Business community supports greenhouse gas reductions
The Business Roundtable reported 70 percent of its member companies – representing every sector of the U.S. economy – embraced voluntary actions to address greenhouse gas (GHG) emissions by participating in its Climate RESOLVE program.

The program was launched in February 2003.

The Climate RESOLVE report presents results of a survey of participating companies that show all of the respondents are putting in place the building blocks for effective GHG management. Ninety-two percent of these companies took or are taking measures this year to manage GHG emissions.

Key findings from the survey of Climate RESOLVE participants include:
• 92 percent of respondents reviewed their GHG emissions profile or are doing so in 2004;
• 89 percent took or are taking actions to reduce, avoid, offset or sequester GHG emissions;
• 71 percent established or are establishing written policies to track and meet GHG emissions goals;
• 72 percent reported or are reporting GHG management activities to the public;
• 76 percent participated or are participating in government-sponsored programs to reduce, avoid, offset or sequester GHG emissions;
• 61 percent invested or are investing this year in new technologies or products to improve energy efficiency, reduce GHG emissions or lower GHG intensity in the environment.

“Climate change is a challenge that requires sustained public and private efforts by all countries,” said Business Roundtable president John J. Castellani. “Our companies understand that improving energy efficiency is good for the environment and good business. This progress report shows that the climate has indeed changed in companies across America.”

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Natural gas could support manufacturing sector expansion
The growing cost of energy is one of a host of current challenges facing U.S. manufacturers, but the ability to expand imports of liquefied natural gas (LNG) at reasonable cost could help rebuild the global competitiveness of the sector, according to a new report.

The report from the Manufacturers Alliance/MAPI, Liquefied Natural Gas and the Future of Manufacturing, finds that absent new sources of natural gas supply, the price of this crucial energy resource is almost certain to climb steeply.

“This will weaken the competitive position of the heavily energy-dependent manufacturing sector and lead to more losses of good jobs and high value-added production in the United States,” said Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI. “LNG offers the best near-term solution to adding what is essentially a new energy source in the United States.”

The report, written by economist Donald A. Norman, indicates the price of U.S. natural gas has more than doubled in the past few years and is now 25 percent more expensive than in Europe. More ominously, the inflation adjusted price of natural gas could increase by as much as 80 percent in the next 15 years.

With the loss of production and domestic jobs, including more than 90,000 in the chemicals industry alone, the United States is also losing the high-skilled jobs and research base of an innovative industrial sector, which should be one of the pillars of the U.S. economy.

The paper recommends the United States take advantage of the world’s vast reserves of stranded natural gas. Technical advances have lowered the delivered cost of LNG to between $2 and $4 per million Btus (MMBtu), a range well below the current average wellhead price of gas of approximately $5.07 per MMBtu.

This means LNG imports can compete with conventional gas supplies. The expansion of gas supplies can be facilitated by the expeditious review of proposals to construct LNG receiving terminals. If just eight new terminals are built (in addition to the two already approved) before 2010, LNG could meet more than 22 percent of projected domestic consumption. Importantly, reaching this level of supply would actually reduce the cost of natural gas by 20 percent to 25 percent below current levels. All gas users -- residential, commercial and industrial -- would benefit.

In addition to enhancing U.S. energy supplies, some proposals for LNG terminals would enable major users, such as the chemicals, plastics or metal transforming industries, to procure supplies directly from sellers and thus secure long-term supply at attractive prices. Manufacturers who can include LNG in their supply portfolio will improve their competitiveness.

“For manufacturers the future is now,” Norman said. “It is important that we move as quickly as possible to take advantage of the promise held out by expanding LNG imports so that they can help meet the threat of competition from manufacturers located in countries with lower priced gas.”

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Confidence among job seekers increases
A new analysis of government employment data and a private survey of unemployed managers revealed that confidence in the economy is rising among workers and job seekers.

The evidence was found by global outplacement firm Challenger, Gray & Christmas Inc. in its review of the latest employment report from the Bureau of Labor Statistics and its own Challenger Job Market Index. Both show a marked increase in risk-taking behavior among job market participants.

Challenger's review of government data found that over the three-month period from June to August, the percentage of job leavers, labor market entrants and new entrants reached its highest levels since 2001.

Between June and August, an average of 11.1 percent of unemployed workers voluntarily left their previous positions. That was up from 9.2 percent averaged during the same period in 2003. It was the highest three-month figure since the July-to-September period in 2001, when job leavers accounted for an average of 12.2 percent of job seekers.

Further inspection of government data reveals that the percentage of unemployed Americans reentering the job market and entering the job market for the first time also reached its highest level since 2001 and 1999, respectively.

Reentrants, who are rejoining the job market after having spent the last six months neither working or looking for work, accounted for 30.7 percent of the unemployed in August, the largest percentage since the 31.2 percent in August 2001.

Meanwhile, 8.7 percent of the August unemployed were entering the job market for the first time, up from 7.3 percent a year ago. August marks the highest percentage of new entrants since October 1999, when the figure reached 8.8 percent.

"For the last few years, people were afraid to leave their jobs. Many remained in the protected confines of school, earning more degrees while employers rejected or repeatedly laid off their fellow classmates who ventured into the job market. Others simply dropped out of the job market, choosing to focus on family or go back to school," said John A. Challenger, CEO of Challenger, Gray & Christmas. "These trends finally appear to be reversing, not necessarily because the job market is showing significant improvement, but because it is perceived to be less risky to make decisions such as leaving one's current employer for new opportunities or reentering the job market after raising a family."

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OSHA cites envelope manufacturer for safety violations
The Occupational Safety and Health Administration (OSHA) issued citations to a Mt. Pocono, Penn., envelope manufacturer for alleged safety violations that placed employees at risk of being injured by machinery and electrical equipment.

OSHA cited United Envelope LLC, doing business as Huxley Envelope, for one willful, 18 serious and four other alleged violations following an inspection initiated in March 2004. The company has been inspected three times since 1996.

"Strong enforcement has been one of the keys to this administration's success in reducing workplace injuries and illnesses to record-low levels," said Labor Secretary Elaine L. Chao. "The significant penalty of $113,000 in this case demonstrates our commitment to protecting the health and safety of America's workers."

OSHA is proposing a $70,000 penalty for one alleged willful violation for failure to ensure that employees are protected from hazards associated with rotating parts of unguarded machinery. The penalty is the maximum fine allowed by law. The serious violations, covering a variety of hazards associated with machine guarding and electrical violations, carry a penalty of $43,000.

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Ohio manufacturer to to shut down
Reichert Stamping Co., an 80-year-old auto parts manufacturer based near Toledo, Ohio, will shut its doors and lay off its workforce of 65 people, according to United Auto Workers (UAW) officials.

Founded in 1924 as a manufacturer of copper toilet-tank floats, the company survived numerous recessions and the Great Depression as a family-owned business. At peak production, Reichert had more than 250 workers.

Now, the 225,000-square-foot facility in Sylvania Township will sit empty unless former company owner Robert Reichert can find someone to purchase it. In April, Reichert sold the plant's assets and liabilities to American Metals Industries.

Reichert Stamping is another in a long line of small to mid-size manufacturers that eliminated its workforce in the Toledo area and around Ohio. Alcoa Inc. plans to eliminate its Northwood, Ohio, plant workforce of 140 by year end, and carburetor body maker Gerity-Schultz Inc. will lay off 34 workers before it shuts its doors in November.

"We're up against it now," said Bruce Baumhower, president of UAW Local 12. "Now we're looking at 220 to 230 out of work."

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MAPI: Manufacturing recession, recovery ends
The long manufacturing recession and recovery is over, according to Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI.

Meckstroth stressed the fact that the Federal Reserve revised upward the July 2004 figure for manufacturing production to a level that surpassed the June 2000 pre-recession peak in manufacturing production. It took 49 months to recoup the June 2000 pre-recession manufacturing production level.

“August’s 0.5 percent gain in manufacturing output confirms that the manufacturing sector is back in the expansion mode,” said Meckstroth. “A sharp decline in electric utility production moderated the gain in overall industrial production. Electric utility production is very volatile on a month-to-month basis and will return to growth when the weather dictates.”

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OSHA fines auto parts maker following amputation
An Ohio automotive parts manufacturer that failed to protect and train workers about hazards associated with mechanical power presses is facing proposed fines of $540,000. The fines follow an accident in which an employee lost three fingers and suffered extensive upper body injuries, according to the Occupational Safety and Health Administration (OSHA).

"It is critical that employers protect their workers from occupational hazards," said Labor Secretary Elaine L. Chao. "The significant fines of $540,000 proposed in this case reflect the seriousness of the hazards found and our commitment to aggressively enforcing worker health and safety laws."

Plastech Exterior Systems Inc., an automotive stamping manufacturer in Newton Falls, Ohio, was cited for 16 safety and health violations, including seven alleged willful violations, for failure to secure in place the two-hand control stations of mechanical power presses.

"Management knew that workers operating mechanical power presses were exposed to serious hazards and yet they failed to take the action they knew was needed to eliminate those hazards," said OSHA administrator John Henshaw. "Even after a worker suffered serious injuries, another employee was allowed to work on the very same machine, again without any efforts to abate the hazards, and that's unacceptable."

The citations are the result of an OSHA investigation that began April 8 in response to a complaint that an employee suffered an amputation injury to his hand and serious injury to his arm while operating a mechanical power press. The investigation found the amputation happened March 17.

OSHA assessed Plastech $490,000 in penalties for the seven willful citations. The company was also issued five serious citations with penalties of $15,000, two repeat citations with a penalty of $35,000, and two other-than-serious citations with no monetary penalty.

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SME offers certificate program on metal fluid management
The Society of Manufacturing Engineers (SME) and the Society of Tribologists & Lubrication Engineers (STLE) partnered to host the new Metalworking Fluid Management Certificate Program, which will take place Nov. 9 -11 at SME world headquarters in Dearborn, Mich.

Attendees of this three-day program will gain in-depth knowledge on topics like additive chemistry, factors affecting fluid quality, condition monitoring tests, fluid microbiology and toxicology. Information is synthesized into practical experience with a series of case studies. The Metalworking Fluid Management Certificate Program provides attendees with documentation that their knowledge and understanding of metalworking fluid management is recognized in the industry today.

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